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- Hello, Erin, will you tell the listening/viewing
audience who you are and what you do?
- I am Erin Lowry, author of the now three part
broke millennials series.
And I like to call myself a financial translator.
I think it's the most accurate description
for what I try to do.
Personal finance expert also,
gets you know, they ended about.
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- If they get a little chunk of money
like an IRS refund or something
do they save it or do they put it towards their debt?
- I feel very strongly that you need some savings.
So if you're at zero, you need some buffer.
And I get in some people's minds is like,
well if I have debt, I'm at a negative.
I mean, all right, technically on paper.
But also if something happens tomorrow that you need cash
on hand to pay for, it's just going to be more debt.
If you don't have at least some cash buffer
and also having that cash buffer just gives you a little bit
of flexibility.
Like, Hey, I've been at my parents for six months.
This is now toxic.
I need my own apartment.
Now I have money that I can put
down a deposit, on space, things like that.
I do think there is just a lot to be said about having
at least some level, my baseline advice
one month bare minimum living essentials.
So whatever your bare living expenses are
and by that, I mean just survival bills.
You know, rent, food, utilities, medical,
any medicine, childcare, if you need transportation
those things add up that number.
That one month's worth of that is the bare minimum
I would like to see in emergency savings
obviously more the better.
It depends on your risk tolerance
all the nuanced information here.
But I would like you to,
I'd like to see you have that
before you focus on aggressive debt repayment.
Because I just don't think it's worth,
hey I've made all this great headway on my debt.
And then two tires blew out on my car
and now that's going to be $600 to replace.
And that's going to get financed at 24% on my credit card.
- So you've talked about investing in one of your books.
Someone asked, "how can a young, poor person invest?"
- First of all,
I would like us to kill the language of save for retirement.
It is investing for retirement.
- Yes, yes, yes, yes.
- Thing one, if you have access to a 401k
or if you are self-employed or what have you
and you have the ability to open an IRA,
you are investing for retirement.
You are an investor.
You are taking advantage of compound interest
and the stock market.
As long as the money is not sitting in cash.
I don't normally give investing advice, but I will just say
if you're opening up an account, 401k, IRA,
you have no idea because you come to a screen
that's like pick your investments.
And you're like, I don't know what any of this means.
And I don't have anyone in my life I can call.
There's something called a target date fund
sometimes called a lifecycle fund or an all in one fund.
That is a way, and it's going to be tied to a year.
So if you're, let's say 30
and you think you're going to retire around 2065,
you would pick a target date fund 2065.
And then over the years, that fund is invested for you.
And it's like aggressive
and then more conservative, more moderate.
And the more conservative as you age.
It's a way to make sure when you're unsure of investments
to pick, that your money is actually invested
in not sitting in cash for decades.
So that would be my thing one,
is to please be investing for retirement.
If you have access to an employer match 401k plan,
at least putting in money to get the employer match.
- People don't realize that saving for retirement
isn't putting money into a savings account,
saving for retirement is investing.
Even though that seems scary,
to me sometimes my retirement fund investing goes down.
Sometimes it goes up.
Sometimes it will be, but
like the idea is that it's long term so, you know
I put in a certain amount of money
sometimes you, it generally, it's more it gets to be more
so don't freak out, but sometimes I'll look
at it and I'll be like, this was this number.
No, it's less.
Ooh. But like the idea is you're hoping
that by the time you're older, it will have ended up on top.
It's a risk you don't,
I don't think people realize that it is investing.
So if you are having a 401k or an IRA, whatever
that any sort of fund like that, that's investing.
- You're an investor.
- Yeah. - As long as
you've picked investments and it's not sitting
in a cash account that is always just my second
PTSA on that topic.
Well, that would be, my first point is investing
for retirement is the best way to get started.
Honestly, the easiest barrier to entry, it's tax advantage
which means it helps you overall with, you know
maybe getting a bigger tax refund, all that.
Now, if you're like, Hey, I'm already doing that
and I still would like more
but I don't have this huge chunk
of change to put into the market.
Yeah. You could look at things like micro investing apps.
So that's, you know, your acorns, your stashes
your Robin hoods.
I have mixed feelings in that, they still charge a fee.
Usually it sounds really small
like a dollar a month, which is small
if you're investing enough money to make it small.
If you're only putting $5 a month into this
it's eating up all your returns.
So you have to, I like to say commit
to a bare minimum of $25 a month going into them.
If that's what you're going to use in order to make sure
that the fee is not eating up all of the potential benefit.
But also a lot of people are at a point where like $25,
that's that makes a big difference.
- Yes.
- So that is not money that I can tie up in investing.
And I also want to bring up the point
that gets raised in, "Broke millennial takes on investing."
That you have to earn the right to be investing in what we
a taxable account.
Outside of retirement,
you need to hit your other baselines first.
It's putting on that financial oxygen mask.
You want to make sure
that you have an emergency savings fund,
that you've paid off consumer debt,
that your student loans don't have to be totally paid off
but are in a stable place.
And that you feel stable
before we add investing outside of retirement accounts.
- So your retirement account is one level of investing.
And I had, I had that setting that up was like huge for me.
And then now I have my little TD Ameritrade account
that I just looked at that I put $500 in like last year.
And now it's up to $716 not to brag
but that's my like middle that's my like little thing that
I'm doing like on the side that I think I wouldn't
I wouldn't have been able to do that before
trying before setting up my, my IRA, terrifying stuff.
Really scary.
And you have to just, I like fully did not understand
that it was going to fluctuate.
You just have to be like, okay, it's going to fluctuate.
Here's the thing.
Did that fuck some people in 2008?
For sure.
It's scary.
Cause it's betting.
I know people don't like when you say that
investing is gambling.
- Finish your point.(chuckles)
- People don't like when I say that,
but it feels like it is.
- I totally get where the feeling comes from.
And there's an element to it where
if you look at it like a game stop scenario
that is much more akin to like Vegas betting
because the hedge funds would be the house
and the house always wins.
But in this one scenario you were like,
screw them we got them
which occasionally happens in Vegas.
Right?
And I get why people do draw that correlation.
The reason that I tend to push back is first of all
most investing should just be kind of boring.
- Yeah.
- Like you just consistently put money in every month
and you put it in to like fairly basic accounts.
You're not spending your days and hours
unless you're truly geeking out
over this stuff.
- Yeah. - Don't waste your time trying
to like track all these things
and figure out what the next best investment is.
And who's going to spike.
Is there, are they overvalued?
Who's undervalued?
- Yeah. Mine is just a sit and forget.
- Yeah.
And that is truly, for most people, it should just be
like index funds or ETFs,
consistently contributing to it.
This is what it is and yeah,
the market's going to go up and down,
to me one of my favorite chapters
of my second book is all about the history of the market
because I do think it brings you some level
of comfort to understand the ups
and downs because what's past is prologue.
It's a cycle it's going to happen again.
Like that's just what we know of the market.
And for the folks who are listening,
who feel very doomsday about it,
they're like it's all just going to crash and burn.
We're going to need to be like living off the land
and trading in golden medicine.
I hear you.
My point though, in case we don't in our lifetime
have a total doomsday scenario play out.
- The rev doesn't happen.(chuckles)
- Fingers crossed, but you are
guaranteeing yourself a personal financial apocalypse.
If you don't prepare on some level,
- Yeah - for the future.
And I briefly on this, want to just talk
about generational wealth, because I think for some people
the frustration is, "I'm barely scraping by myself
but I want to be able to build more
for if I have kids or my family or the future.
And if I can't even get into the market where
people are making this wealth because you're telling me
to do all these other things first."
Part of it though too
is creating a stability for yourself.
And part of generational wealth goes beyond just
like passing on a big inheritance.
It can be putting yourself
in a position to pay for your kids' college educations
so that they don't have to take out student loans.
It could be buying a home that can be passed
on for, you know, paid off in full.
It, it doesn't have to be the way that we think about it
in terms of the like Warren buffet, Jeff Bezos of the world
being able to pass on - Right.
- huge fortunes.
It can be just giving your kids advantages
that you or privileges that you didn't have.
- Yeah. That's really beautiful.
Stability is also something that is
is beautiful to be passed down.
- Yeah.
- I also, for my little TD Ameritrade account,
I went through and I invested in a bunch
of airlines when the pandemic happened.
(chuckles)
They were real low
and I knew they were going to come back
and I did a little reading, right.
So like not like a huge amount, but I was like, okay
well what stocks are doing well?
okay, well, Etsy's doing well.
So I'm going to invest in Etsy
because I feel like Etsy has the longterm future.
Oh, this is a fun story that someone told me.
This woman who's an investor
she said that she met with Coca-Cola and she was like
come on, like, or she was like an investment reporter.
And she was like, give me something.
And the guy was like, well
I think we're gonna maybe do a alcoholic topo chico.
And she was like, Oh, that's cool.
But she didn't really care about topo chico,
she was like, fine
So she tweets like alcoholic topo chico coming soon.
The stock for Coca-Cola through the goddamn roof because
because she was like that,
"I have no, I did not understand the power of topo chico",
like that people would be like, you know
so I think like you, you know
I think like maybe keeping an eye on, like
if I had been keeping an eye a little bit on like, what's
what's these things that I like, right?
Like if I'm like huge fan of Topo Chico,
I'm like, what
what kind of stuff is going on? You know.
Or like that's the bare minimum or whatever.
But also it's funny because I said to my partner
like I was telling this story
and when I got to just the part
about the guy saying there was going to be alcoholic topo
chico, my partner was like, what!
(both laughing)
He was so excited.
- If you want to do some individual stock picking
or some planning?
So whether it is, you know
the tried companies like a Coca-Cola, it's been, you know
a mainstay for years and years and years
or whether it's cryptocurrency and something
that's currently considered an untested asset
class.
It is fine to take a portion of your money,
but I would also consider, unless again,
you're like peeking out hardcore,
and this is going to be your life. 5%.
Like a small amount that if it were to get totally lost
it's not going to devastate your overall situation
which is also just a key part of investing diversify.
You have more than one thing.
And it is like, I have done similar things
where I've been playing around too with like,
hey, once we reopen people can do things like go
to ticketed events who were the guys that hold access
to ticketed events.
What are their stats looking like right now?
I totally hear you.
Like, there's this levels of that that kind of makes it fun
makes it a bit more gamified.
And for some people that's also what gets them to buy in
which is great.
I want more people investing.
- Well, thank you so much.
I appreciate you dropping by to help me promote
"bad with money" the podcast, which will return March 31st.
Where can people find stuff about you and your stuff.
- Most active on Instagram, so that's at
broke millennial blog.
Every Wednesday I do an ask me anything.
So if you have a pressing question
please come ask or like slide into my DMS.
That's fine.
My website's brokemillennial.com.
All three of the books are available.
Wherever books are sold.
- Well, thank you so much.
I really appreciate it.
Also there's an episode of bad with money with Erin
Nonex so you should look and find that too.
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